Beijing, 8 April 2014 – The Shenhua Group, the world's biggest coal producer by volume, is to stop extracting groundwater for their flagship coal-to-liquid project in Inner Mongolia’s Ordos - an area struggling with severe water shortages affecting farmers and herders.

The state-owned Chinese coal company made their announcement during a meeting with Greenpeace East Asia, saying the plan was already underway. Regarding Shenhua’s dumping of toxic industrial wastewater in Ordos, which Greenpeace exposed in July 2013, they said they had made major investments in wastewater treatment facilities to guarantee improvement.

On July 23 2013, Greenpeace East Asia revealed that Shenhua was overexploiting groundwater in the Haolebaoji basin in Ordos, an area of fragile ecology. The organisation also exposed Shenhua’s illegal dumping of toxic industrial wastewater, highlighting the severe water intensity of the coal industry and the urgent need to curb its expansion in China’s arid provinces.

Welcoming the announcement, Li Yan, Head of Greenpeace East Asia’s Climate and Energy Campaign, said, “Greenpeace appreciates this move by the Shenhua Group, as they recognise that the water situation with the coal industry remains very challenging in western China. It takes serious courage for a billion dollar plant to switch water plans in the middle of their first decade.”

Li Yan added, “Right now, water resources in the area are still being exploited. The next step for Shenhua is to deliver their action plan and stop the damage as early as possible, while avoiding new environmental problems along the way.”

Shenhua stated in a letter their intention to address disputes over water resources in the arid areas of Inner Mongolia, acknowledging the water constraints in western China. Coal production has caused major damage to local ecosystems due to the overuse of groundwater causing water levels to drop drastically.

“Shenhua’s wise decision once again reaffirms that the water situation with the coal industry remains very challenging in western China. It is an alarm bell for other companies queuing up to get approval for their new coal-to-gas or coal-to-liquid plants in Inner Mongolia, Ningxia, Shanxi and elsewhere. If the industry’s top company has failed to secure water, the others may want to recalculate their own risk evaluation,” Li Yan said.

The move comes after eight months of campaigning by Greenpeace East Asia and other Chinese NGOs. This is the first time Greenpeace has challenged a State-Owned-Enterprise in China. Greenpeace hopes that other coal companies will follow Shenhua’s lead and regulators will be able to implement much needed water policies.